Internal audit is often confused with the external financial statement audit, but the two serve very different purposes. For growing and internationally active companies, a strong internal audit function is one of the most effective ways to build a compliance foundation that holds up as the business scales, goes public, or expands into new markets.
Internal Audit vs. External Audit
An external audit, performed by an independent firm, results in an opinion on whether your financial statements are fairly presented. Internal audit is a separate function (whether in-house or outsourced) focused on evaluating and improving your organization's risk management, control processes, and governance on an ongoing basis. Internal audit doesn't issue a public opinion on your financials; it reports to management and the audit committee or board, identifying risks and control gaps before they become bigger problems, including problems your external auditor would otherwise find first.
What Internal Audit Services Typically Cover
Risk assessment: identifying and prioritizing the operational, financial, compliance, and strategic risks most relevant to the business
Controls testing: evaluating whether key controls across finance, operations, and IT are designed effectively and operating as intended
SOX readiness and support: for public companies or those preparing to go public, internal audit often leads or supports the SOX compliance program
Process and operational reviews: evaluating efficiency and control gaps in specific business processes, from procurement to revenue cycles
Fraud risk assessment: identifying where fraud risk is elevated and whether controls adequately address it
Regulatory compliance reviews: particularly relevant for internationally active companies navigating multiple regulatory environments
Why Growing Companies Need Internal Audit Before They Think They Do
Many companies wait until they're required to have an internal audit function, often as a public company requirement or lender covenant, before building one. That's usually too late. Control weaknesses tend to compound as a company scales: what was a minor gap at $10 million in revenue becomes a material weakness at $100 million, and remediating it under a public company timeline is far more disruptive than addressing it proactively.
Internationally active companies face an added layer of complexity, since internal audit needs to account for controls across multiple jurisdictions, currencies, and regulatory frameworks, not just a single domestic entity.
In-House, Outsourced, or Co-Sourced?
Fully in-house: typically for larger organizations with the scale to justify a dedicated team
Fully outsourced: an external firm performs the internal audit function entirely, often the most cost-effective option for growth-stage companies
Co-sourced: an internal audit lead works alongside an external firm that provides specialized expertise, testing capacity, or coverage during peak periods (like SOX testing season)
For most growth-stage and mid-cap companies, outsourced or co-sourced models provide access to experienced internal audit professionals without the fixed cost of building a large in-house team.
How Internal Audit Strengthens Your External Audit
A well-functioning internal audit program directly benefits your external financial statement audit. When internal audit has already tested key controls and resolved gaps, external auditors can place more reliance on those controls, which reduces the scope and cost of external testing.
Build Your Internal Audit Function With an Experienced Partner
MBP Global supports growing and internationally active companies with internal audit services designed to strengthen compliance, reduce risk, and prepare the business for its next stage, whether that's an IPO, an acquisition, or continued growth as a private company.
